While Congress threatens to regulate how much foundations can spend on themselves, three organizations have amassed data that should make legislators think twice about adopting a cookie-cutter approach. The Urban Institute’s Center on Nonprofits & Philanthropy, the Foundation Center, and GuideStar examined the expenses and compensation practices of the 10,000 largest (by giving) independent, corporate, and community foundations in the United States. They not only discovered that foundations vastly differ in whether and how they spend money on themselves, but also teased apart which factors lead to more or less spending.
“The most important factors are whether [foundations] are staffed, and their number of staff,” says Elizabeth T. Boris of the Urban Institute, the study’s lead author. “It’s common sense, but no one has demonstrated it before. That’s the major breakthrough.” The authors also found that foundations with more staff members tend to have international giving programs, run direct charitable activities (such as conference centers, museums, or research laboratories), or make grants (such as scholarships, fellowships, or prizes) to individuals – all functions that require many hands.
Boris further notes that although there were a few foundations with “extraordinary” expenses and salaries, these were far outnumbered by foundations that are “basically being run by volunteers,” she says. A full 30 percent of the 10,000 largest foundations have neither operating nor administrative expenses. And 66 percent do not pay any compensation to staff or trustees.
“We hope that this will be the basis of a more informed debate on expenditures and help policymakers see that this is not a one-size-fits-all field,” says Boris.
Other authors of the report, titled “Foundation Expenses and Compensation: How Operating Characteristics Influence Spending,” include Loren Renz and Asmita Barve, both of the Foundation Center, and Mark A. Hager and George Hobor, both of the Urban Institute.
Read more stories by Alana Conner Snibbe.